You (or your parents) purchase a used car for $15,867.00 plus 5.25% sales tax. The down payment is 10% of the total cost and you (or your parents) have an excellent credit rating. What is your principal balance at the start of the loan?
First, calculate the total cost of the car including sales tax:
$15,867.00 + ($15,867.00 * 0.0525) = $15,867.00 + $834.94 = $16,701.94
Next, calculate the down payment:
$16,701.94 * 0.10 = $1,670.19
Subtract the down payment from the total cost to find the principal balance at the start of the loan:
$16,701.94 - $1,670.19 = $15,031.75
Therefore, the principal balance at the start of the loan is $15,031.75.